While suffering a decline in bulk cargoes and 1million tonne decline in log exports, Port of Tauranga (POT) booked a 12% increase in container volumes to hit a record 954,006 TEUs (twenty foot equivalent units/containers).
It is predicting a record more than 1million TEUs for 2016-17.
POT declared a final dividend of 30c per share, taking full year dividends to 53c, but also released a special 25c dividend yesterday, the latter a $34million first tranche of $140million proposed to be returned over the next four years.
POT shares were up 17c to $19.50 after the announcement.
Revenue fell from $268.5million a year ago to $245.5million, due to a $32million revenue decline from splitting of revenue in a new joint venture, while earnings before interests, tax, depreciation and amortisation rose 2.2% from $123million to $125.7million.
After-tax profit declined 2.4% to $77.3million, following increased depreciation charges and the log downturn of 18%, to 4.6million tonnes.
POT chairman David Pilkington said the port company had "largely completed" a $350million, five-year investment programme.
"We have capacity to continue to grow freight volumes for the foreseeable future, and importantly relieve constraints now emerging elsewhere in the country’s port infrastructure," he said in a statement.
Craigs Investment Partners broker Peter McIntyre said while the result was "a miss", in that POT guidance had predicted a flat result, that was "papered over" by the proposed $140million special dividend.
"We expect positive initial share price reaction, due to extra dividend and share split, but as the noise settles, we expect the stock to retrace to earlier levels," he said.
Forsyth Barr broker Damian Foster said POT’s earnings result was below Forsyth Barr and market expectations, but compensated for the operational softness with the proposed $140million capital management programme.
The result was "mixed" from a cargo perspective, as expected. Container volumes were up 12% but the bulk volumes down 11%.
"Operational profits missed our expectations, given the higher costs," Mr Foster said.
POT has been one of the most aggressive ports in the country in recent years, developing inland ports and joint ventures with other companies, including Timaru’s PrimePort, where it has a 50% stake in the port and 50.1% in its container terminal.
Timaru’s container terminal hit a record container volume during the year, up 18%, in handling 84,402 TEUs.
Of the $140million proposed to be returned to shareholders, Mr Pilkington said the final amount was dependent on POT’s funding of any potential growth initiatives.
"A return of the full $140million to shareholders would still ensure the company retains a conservatively geared balance sheet and an investment grade credit rating," Mr Pilkington said.
In an effort to enhance share trading, Mr Pilkington also announced a share split yesterday.
Shareholders are to receive five ordinary shares for one share held at present.
"The share split ... is a measure taken to enhance liquidity in the market for shares," he said.
POT’s chief executive Mark Cairns said the port’s shipping channel had been deepened to 14.5m and to 15.8m outside the harbour entrance, in preparation for the first visit of a 9500 TEU vessel in October.
"Port of Tauranga will remain somewhat protected from severe fluctuations in trade through its diverse cargoes, income sources and locations, as well as its long-term freight agreements with major exporters," he said.
He said POT would provide full year earnings guidance at its annual shareholder meeting, on October 20.
Port of Tauranga
• 131.1 million shares on issue.
• @ $19.33 per share, market capitalisation is $2.63billion.
• Year-high: $22.24, year-low $16.6
• 0.54% majority shareholder the Bay of Plenty Regional Council.
• Completed $350million five-year investment programme
• To return $140million to shareholders over four years.
• Share split: five for one existing.
SOURCE: POT
